EXHIBIT 10.5
EXHIBIT J
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") dated as of March 26,
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2004, by and between Heritage Worldwide, Inc., a Delaware corporation with its
principal place of business at ▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇ ▇▇▇▇▇-▇▇▇-▇▇▇
France 19702 (the "Company"), and Armadillo Investments, Plc., a company
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incorporated in England and Wales, with its principal place of business at ▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ (the "Purchaser").
Simultaneously with the execution and delivery of this Agreement, the
Purchaser and the Company have entered into a Convertible Debenture Purchase
Agreement, dated as of the date hereof (the "Purchase Agreement"), which
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Purchase Agreement is incorporated herein by reference, and pursuant to which
the Purchaser has agreed to purchase a Debenture (the "Debenture"), that is
convertible into Common Stock, par value $.001 per share of the Company (the
"Underlying Shares"), and has an option to acquire Common Stock, par value $.001
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per share of the Company (the "Option Shares"), all as more particularly
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provided therein.
Simultaneously with the execution and delivery of this Agreement or
sometime thereafter, the Purchaser and Milo Finances, S.A. have entered into a
Convertible Debenture Purchase Agreement (the "Milo Purchase Agreement"), which
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Milo Purchase Agreement is incorporated herein by reference, and pursuant to
which the Purchaser has agreed to purchase a Debenture (the "Milo Debenture"),
that is convertible into Common Stock, par value $.001 per share of the Company
held by Milo (the "MiloUnderlying Shares"), and has an option to acquire Common
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Stock, par value $.001 per share of the Company (the "Milo Option Shares"), all
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as more particularly provided therein.
The Company and the Holder hereby agree as follows:
1. Definitions. Capitalized terms used and not otherwise defined
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herein shall have the meanings given to such terms in the Purchase Agreement.
As used in this Agreement, the following terms shall have the following
meanings:
"Affiliate" means, with respect to any Person, any other Person that
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directly or indirectly controls or is controlled by or under common control with
such Person. For the purposes of this definition only, the term "control," when
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used with respect to any Person, means the possession, direct or indirect, of
the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities, by contract or
otherwise; and the terms "affiliated," "controlling" and "controlled" have
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meanings correlative to the foregoing.
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"Business Day" means any day except Saturday, Sunday and any day which
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shall be a legal holiday or a day on which banking institutions in the state of
New York are authorized or required by law or other government actions to close
between the hours of 9:30 a.m. and 5:00 p.m. New York Time.
"Commission" means the United States Securities and Exchange Commission.
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"Common Stock" means the Company's common stock, par value $.001 per share.
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"Event" shall have the meaning set forth in Section 7 hereof.
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"Event Date" shall have the meaning set forth in Section 7 hereof.
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"Exchange Act" means the Securities Exchange Act of 1934, as amended.
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"Holder" or "Holders" means the Purchaser and any other holder or holders,
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as the case may be, from time to time of Registrable Securities.
"Indemnified Party" shall have the meaning set forth in Section 6(c)
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hereof.
"Indemnifying Party" shall have the meaning set forth in Section 6(c)
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hereof.
"Inspectors" shall have the meaning set forth in Section 5(a)(viii) hereof.
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"Losses" shall have the meaning set forth in Section 6(a) hereof.
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"New York Courts" shall have the meaning set forth in Section 10(e) hereof.
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"Person" means an individual or a corporation, partnership, trust,
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incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or political subdivision
thereof) or other entity of any kind.
"Proceeding" means an action, claim, suit, investigation or proceeding
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(including, without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or threatened.
"Prospectus" means the prospectus included in a Registration Statement
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(including, without limitation, a prospectus that includes any information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the Securities Act), as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Registrable Securities covered by such
Registration Statement, and all other amendments and supplements to the
prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such prospectus.
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"Registrable Securities" means the Underlying Shares, the Option Shares,
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the Milo Underlying Shares and the Milo Option Shares and any other shares of
Common Stock issued as (or issuable upon the conversion or exercise of any
warrant, right, or other security which is issued as) a dividend or other
distribution with respect to, or in exchange for or in replacement of, the
Underlying Shares, the Option Shares, the Milo Shares and the Milo Option
Shares, excluding in all cases, however, any Registrable Securities sold by a
Person in a transaction in which the seller's rights under this Agreement are
not assigned.
"Registration" shall have the meaning set forth in Section 3(a) hereof.
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"Registration Expenses" means all expenses incurred in effecting any
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registration pursuant to this Agreement, including, without limitation, all
registration, qualification, and filing fees, printing expenses, escrow fees,
fees and disbursements of counsel for the Company, blue sky fees and expenses,
and expenses of any regular or special audits incident to or required by any
such registration, but shall not include Selling Expenses, fees and
disbursements of counsel for the Holders and the compensation of regular
employees of the Company, which shall be paid in any event by the Company.
"Registration Statement" means each registration statement, contemplated by
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Section 3(a) hereof, including the prospectus, amendments and supplements to
such registration statement or prospectus, including pre- and post-effective
amendments, all exhibits thereto, and all material incorporated by reference or
deemed to be incorporated by reference in such registration statement.
"Rule 144" means Rule 144 promulgated by the Commission pursuant to the
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Securities Act, as such rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such rule.
"Rule 144A" means Rule 144A promulgated by the Commission pursuant to the
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Securities Act, as such rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such rule
"Rule 415" shall mean Rule 415 as promulgated by the Commission under the
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Securities Act, as such rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such rule.
"Rule 158" means Rule 158 promulgated by the Commission pursuant to the
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Securities Act, as such rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such rule.
"Securities Act" means the Securities Act of 1933, as amended.
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"Selling Holders" means each Holder any of whose Registrable Securities are
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being registered pursuant to a Registration Statement.
"Underwritten Registration" or "Underwritten Offering" means a registration
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in connection with which securities of the Company are sold to an underwriter
for sale to the public pursuant to an effective registration statement.
2. Restrictions on Transfer.
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(a) Each Holder agrees not to offer, sell, transfer, pledge,
assign, hypothecate or otherwise dispose of all or any portion of its
Registrable Securities unless and until the transferee has agreed in writing for
the benefit of the Company to be bound by the terms of this Agreement and;
(i) There is then in effect a registration statement under the
Securities Act covering such proposed disposition and such disposition is made
in accordance with such registration statement; or
(ii) Such Holder shall have (A) notified the Company of the
proposed disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition, and (B)
furnished the Company with an opinion of counsel, reasonably satisfactory to the
Company, that such disposition will not require registration of such shares
under the Securities Act.
(b) Each certificate representing Registrable Securities shall
bear the following legend:
THE SHARES OF COMMON STOCK REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") OR APPLICABLE
STATE "BLUE SKY" OR SECURITIES LAWS ("STATE LAWS"), AND MAY NOT BE
OFFERED, SOLD, TRANSFERRED, ASSIGNED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF UNLESS AND UNTIL (i) REGISTERED UNDER THE ACT
AND APPLICABLE STATE LAWS OR (ii) THE COMPANY SHALL HAVE RECEIVED AN
OPINION OF COUNSEL OR OTHER EVIDENCE, SATISFACTORY TO THE COMPANY AND
ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.
(c) The Company shall be obligated to reissue promptly unlegended
certificates at the request of any Holder thereof if the Holder shall have
obtained an opinion of counsel at such Holder's expense (which counsel may be
counsel to the Company) reasonably acceptable to the Company to the effect that
the securities proposed to be disposed of may lawfully be so disposed of without
registration, qualification or legend;
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(d) Any legend endorsed on an instrument pursuant to applicable
state securities laws and the stop-transfer instructions with respect to such
securities shall be removed upon receipt by the Company of an order of the
appropriate blue sky authority authorizing such removal.
3. "Piggy-back" Registrations.
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(a) If the Company decides to register any of its Common Stock or
securities convertible into or exchangeable for Common Stock under the
Securities Act (a "Registration") on a form that is suitable for an offering of
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shares of Common Stock by the Company or by third parties and that is not a
registration solely to implement an employee benefit plan on form S-8, a
registration statement on Form S-4 (or successor form) or a transaction to which
Rule 145 or any other similar rule of the Commission is applicable (such form, a
"Registration Statement"), the Company shall give written notice to the Holders
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of its intention to effect such a Registration. Subject to Section 3(b) below,
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the Company shall use all reasonable efforts to effect Registration under the
Securities Act of all Registrable Securities that the Holders request be
included in such Registration by a written notice delivered to the Company
within thirty (30) days after the notice given by the Company. Each of the
Holders agrees that any Registrable Securities which such Holder requests to be
included in a Registration pursuant to this Section 3 shall be included by the
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Company on the same form of Registration Statement as selected for the
Registration;
(b) If a Registration involves an underwritten offering, the
Company shall not be required to register securities in excess of the amount
that the principal underwriter reasonably and in good faith recommends in
writing for inclusion in such offering (a "Cutback"), a copy of which
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recommendation, and supporting reasoning, shall be delivered to each Holder. If
such a Cutback occurs, the number of shares that are entitled to be included in
the Registration and underwriting shall be allocated in the following manner:
(i) first, to the Company for any securities it proposes to sell for its own
account, (ii) second, to any Person with demand registration rights requiring
such registration, and (iii) third, to the Holders and other holders of Company
securities with piggy-back registration rights requesting inclusion in the
Registration, pro rata among the respective holders thereof on the basis of the
number of shares for which each such requesting holder has requested
registration;
(c) If the Registration of which the Company gives notice is for
an underwritten public offering, the Company shall so advise the Holders as a
part of the written notice given pursuant to Section 3(a). In such event, the
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right of any Holder to have its Registrable Securities included in the
Registration pursuant to this Section 3 shall be conditioned upon such Holder's
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participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting to the extent provided herein. All
Holders proposing to distribute their securities through such underwriting shall
(together with the Company and its other security holders with registration
rights to participate therein distributing their securities through such
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underwriting) enter into an underwriting agreement in customary form with the
representative of the underwriters or the managing underwriter selected by the
Company;
(d) If the Company elects to terminate any Registration after a
Registration Statement for such Registration shall have been filed, the Company
will have no obligation to register the Registrable Securities that the Holders
sought to have included in such Registration. The Company shall bear all
Registration Expenses of the Holders in connection with any Registration.
4. Representations and Warranties.
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(a) The Company hereby makes the following representations and
warranties to the Purchaser:
(i) The Company has the requisite corporate power and
authority to enter into, execute and deliver this Agreement, and to consummate
the transactions contemplated hereby and to carry out its obligations hereunder.
The execution and delivery of this Agreement by the Company and the consummation
by it of the transactions contemplated hereby have been duly authorized by all
necessary action on the part of the Company. This Agreement has been duly
executed and delivered by the Company and constitutes the valid and binding
obligations of the Company enforceable against the Company in accordance with
its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally the enforcement
of, creditors' rights or by other equitable principles of general application;
(ii) The Debenture is validly issued, fully paid and
non-assessable. The Underlying Shares and the Option Shares have been duly
authorized for issuance, offer and sale, and when issued and delivered, in
accordance with the Purchase Agreement, shall be validly issued, fully paid and
non-assessable. The Milo Underlying Shares and the Milo Option Shares have been
duly authorized for issuance, offer and sale, and when issued and delivered, in
accordance with the Milo Purchase Agreement, shall be validly issued, fully paid
and non-assessable
(iii) The Company has and at all times while the Debentures
remain outstanding and the Option Shares remain unissued, has and will continue
to maintain an adequate reserve of shares of Common Stock to enable it to
perform its obligations under this Agreement and the Purchase Agreement;
(iv) The execution, delivery and performance of this
Agreement, and the consummation by the Company of the transactions contemplated
hereby do not and will not (i) conflict with or violate any provision of its or
any Subsidiary's articles of incorporation, resolutions or bylaws or (ii)
require the consent of any third party, conflict with, or constitute a default
(or an event which with notice or lapse of time or both would become a default)
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under, or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the Company is
a party, or (iii) result in a violation of any law, rule, regulation, order,
judgment, injunction, decree or other restriction of any court or governmental
authority to which the Company is subject (including federal and state
securities laws and regulations), or by which any property or assets of the
Company or any of its Subsidiaries is bound or affected, except in the case of
each of clauses (ii) and (iii), such conflicts, defaults, terminations,
amendments, accelerations, cancellations and violations as would not,
individually or in the aggregate, have a Material Adverse Effect (as defined in
the Purchase Agreement);
(v) Neither the Company nor any Subsidiary is required to
obtain any consent, permit, waiver, authorization or order of, or make any
filing or registration with, any court or other federal, state, local or other
governmental authority or other Person in connection with the execution,
delivery and performance by the Company of this Agreement;
(vi) Neither the Company nor any Subsidiary (i) is in default
under or in violation of any indenture, loan or credit agreement or any other
agreement or instrument to which it is a party or by which it or any of its
properties is bound, except such conflicts or defaults as do not have a Material
Adverse Effect, (ii) is in violation of any order of any court, arbitrator or
governmental body, except for such violations as do not have a Material Adverse
Effect, or (iii) is in violation of any statute, rule or regulation of any
governmental authority which could (individually or in the aggregate) (x)
adversely affect the legality, validity or enforceability of this Agreement, (y)
have a Material Adverse Effect or (z) adversely impair the Company's ability or
obligation to perform fully on a timely basis its obligations under this
Agreement;
(b) The Purchaser hereby represents and warrants to the Company
as follows:
(i) Such Purchaser is a corporation duly incorporated and
validly existing and in good standing under the laws of the jurisdiction of its
incorporation.
(ii) Such Purchaser has the requisite corporate power and
authority to enter into and to consummate the transactions contemplated hereby
and otherwise to carry out its obligations hereunder. The execution and
delivery of this Agreement have been duly authorized by all necessary corporate
action on the part of such Purchaser. This Agreement has been duly executed and
delivered by such Purchaser or on its behalf and constitutes the valid and
legally binding obligation of such Purchaser, enforceable against it in
accordance with its terms; except as such enforceability may be limited by
applicable bankruptcy, insolvency, liquidation, fraudulent transfer,
reorganization, moratorium laws and remedies or by other equitable principles of
general application or similar laws relating to or affecting generally the
enforcement of creditors' rights.
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(iii) Purchaser is acquiring the Debentures and the Option
Shares for its own account for investment purposes only and without a view
toward the resale or distribution thereof, without prejudice, however, to the
Purchaser's right, subject to the provisions of this Agreement, at all times to
sell or otherwise dispose of all or any part of such Debentures or Option Shares
in compliance with applicable federal and state securities laws.
5. Procedures for Registration.
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(a) Whenever the Company is required to register Registrable
Securities under this Agreement, it agrees to do the following at its sole cost
and expense:
(i) advise the underwriter(s), if any, and the Selling
Holders promptly and, if requested by such Persons, to confirm such advice in
writing: (A) when the prospectus, or any prospectus supplement or
post-effective amendment has been filed, and, with respect to the Registration
Statement or any post-effective amendment thereto, when the same has become
effective; (B) of any request by the Commission for amendments to the
Registration Statement or amendments or supplements to the prospectus or for
additional information relating thereto; (C) of the issuance by the Commission
of any stop order suspending the effectiveness of the Registration Statement
under the Securities Act or of the suspension by any state securities commission
of the qualification of the Registrable Securities for qualification, offering
or sale in any jurisdiction, or the initiation of any Proceeding for any of the
preceding purposes; and (D) of the existence of any fact or the happening of any
event that makes any statement of a material fact made in the Registration
Statement, the prospectus, any amendment or supplement thereto, or any document
incorporated by reference therein untrue, or that requires the making of any
additions to or changes in the Registration Statement or the prospectus in order
to make the statements therein not misleading. If, at any time, the Commission
issues any stop order suspending the effectiveness of the Registration Statement
or any state securities commission or other regulatory authority issues an order
suspending the qualification or exemption from qualification of any Registrable
Securities under state securities or Blue Sky laws, the Company shall use its
best efforts to obtain the withdrawal or lifting of such order at the earliest
possible time;
(ii) if requested by any Selling Holder or the
underwriter(s), if any, incorporate in the Registration Statement or prospectus,
pursuant to a supplement or post-effective amendment if necessary, such
information as such Selling Holder and the underwriter(s), if any, may
reasonably request to have included therein, with respect to the number of
Registrable Securities, if any, being sold to such underwriter(s), the purchase
price being paid therefor and any other terms of the offering of the Registrable
Securities to be sold in such offering, and the Company shall make all required
filings of such prospectus supplement or post-effective amendment as soon as
practicable after the Company is notified of the matters to be incorporated in
such prospectus supplement or post-effective amendment;
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(iii) furnish to the Selling Holders and each of the
underwriter(s), if any, without charge, before filing with the Commission, at
least one copy of the Registration Statement, as first filed with the
Commission, and of each amendment thereto, including the prospectus and all
documents incorporated by reference therein and all exhibits (including exhibits
incorporated therein by reference);
(iv) consult with the Selling Holders and the underwriter(s),
if any, prior to the filing of such Registration Statement or prospectus;
(v) deliver to each of the Selling Holders and
underwriter(s), if any, without charge, as many copies of the prospectus
(including each preliminary prospectus) and any amendment or supplement thereto
as such Persons may reasonably request, the Company hereby consenting to the use
of the prospectus and any amendment or supplement thereto by each of the Selling
Holders and each of the underwriter(s), if any, in connection with the offering
and the sale of any Registrable Securities covered by the prospectus or any
amendment or supplement thereto;
(vi) use its best efforts, prior to any public offering of
Registrable Securities, to register or qualify the Registrable Securities under
the securities or blue sky laws of such jurisdictions as the Holder or
underwriter(s), if any, may reasonably request and do any and all other acts or
things necessary or advisable to enable the disposition in such jurisdictions of
the Registrable Securities covered by the Registration Statement; provided,
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however, that the Company shall not be required to register or qualify as a
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foreign corporation where it is not now so qualified or to take any action that
would subject it to the service of process in suits or to taxation, other than
as to matters and transactions relating to the Registration Statement, in any
jurisdiction where it is not now so subject;
(vii) cooperate with the Selling Holders and the
underwriter(s), if any, to facilitate the timely preparation and delivery of
certificates representing Registrable Securities covered by a Registration
Statement and not bearing any restrictive legends, except as required by law,
and enable such Registrable Securities to be in such denominations and
registered in such names as the Holders may request prior to any sale of
Registrable Securities made by the underwriter(s), if any;
(viii) in connection with the preparation and filing of each
Registration Statement under the Securities Act pursuant to this Agreement, the
Company shall give Selling Holders, their underwriters, if any, and one counsel
or firm of counsel and one accountant or firm of accountants representing all
Selling Holders the opportunity to participate in the preparation of such
Registration Statement, each prospectus included therein or filed with the
Commission, and each amendment thereof or supplement thereto.
(ix) make available for inspection by the Selling Holders,
any underwriter participating in any disposition pursuant to a Registration
Statement, and any attorney, accountant or other agent retained by any Holder or
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underwriter (collectively, the "Inspectors"), all financial and other records,
pertinent corporate documents and properties of the Company necessary to enable
them to exercise their due diligence responsibility, and cause the Company's
officers, directors and employees to supply all information reasonably requested
by any such Inspector in connection with such Registration Statement;
(x) notify each seller of Registrable Securities covered by a
Registration Statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in the Registration Statement, as
then in effect, includes and untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading or incomplete in the light of the
circumstances then existing, and, at the request of any such seller, prepare and
furnish to such seller a reasonable number of copies of a supplement to be an
amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of any Registrable Securities, such prospectus shall
not include an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading or incomplete in the light of the circumstances then existing;
(xi) keep such registration effective for a period of one
hundred eighty (180) days or until the Selling Holders have completed the
distribution described in any Registration Statement relating thereto, whichever
first occurs; provided, however, that (A) such 180-day period shall be extended
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for a period of time equal to the longer of (1) the period the Holder refrains
from selling any securities included in such registration at the request of an
underwriter of securities of the Company and (2) the period ending on the date
on which Rule 144(k) first becomes available for transfers of Registrable
Securities and (B) in the case of any Registration of Registrable Securities on
Form S-3 which are intended to be offered on a continuous or delayed basis, such
180-day period shall be extended, if necessary, to keep the Registration
Statement effective until all such Registrable Securities are sold, however in
no event longer than one year from the Effective Date of the Registration
Statement and provided that Rule 415 permits an offering on a continuous or
delayed basis;
(xii) cause all such Registrable Securities registered
hereunder to be listed on each securities exchange on which similar securities
issued by the Company are then listed;
(xiii) provide a transfer agent and registrar for all
Registrable Securities registered pursuant to a Registration Statement and a
CUSIP number for all such Registrable Securities, in each case not later than
the effective date of such Registration Statement;
(xiv) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make available to its
security holders, as soon as reasonably practicable, an earnings statement
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covering the period of at least twelve months, but not more than eighteen
months, beginning with the first month after the effective date of the
Registration Statement, which earnings statement shall satisfy the provisions of
Section 11(a) of the Securities Act; and
(xv) at such time as a Registration Statement covering a
resale of any Registrable Securities has been declared effective by the
Commission, cause its counsel to deliver to the transfer agent for the Common
Stock an opinion, subject to the making by Selling Holders of such
representations and warranties to Company counsel as it may reasonably require,
certifying that such Registrable Securities may be sold by the Selling Holders
pursuant to such Registration Statement with the purchasers thereof receiving
share certificates without restrictive legend, which opinion shall remain
effective so long as such Registration Statement remains in full force and
effect;
(b) Each Selling Holder shall, upon receipt of notice from the
Company of the occurrence of any event of the kind described in Section 4(a)(x),
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forthwith discontinue disposition of Registrable Securities following the
effective date of a Registration Statement covering Registrable Securities until
such Holder's receipt of copies of the prospectus supplement and/or
post-effective amendment or until it is advised in writing by the Company that
the use of the applicable prospectus may be resumed and, in either case, has
received copies of any additional or supplemental filings that are incorporated
or deemed to be incorporated by reference in such prospectus or Registration
Statement.
(c) Each Holder covenants and agrees that (i) it will not offer or
sell any Registrable Securities being registered pursuant to any Registration
Statement until such Holder shall have received copies of the related prospectus
and notice from the Company that such Registration Statement has become
effective and (ii) such Holder and its officers, directors and Affiliates, if
any, will comply with the prospectus delivery requirements of the Securities Act
as applicable to them in connection with sales of Registrable Securities
pursuant to any Registration Statement.
6. Indemnification.
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(a) Indemnification by the Company. The Company shall,
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notwithstanding termination of this Agreement and without limitation as to time,
indemnify and hold harmless each Holder, the officers, directors, agents
(including any underwriters retained by the Holders in connection with the offer
or sale of Registrable Securities), brokers, investment advisors and employees
of each of them, each Person who controls any such Holder (within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act) and the
officers, directors, agents and employees of each such controlling Person, from
and against any and all losses, claims, damages, liabilities, costs (including,
without limitation, costs of preparation and attorneys' fees) and expenses
(collectively, "Losses"), as incurred, arising out of or relating to any untrue
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or alleged untrue statement of a material fact contained in such Registration
Statement, any prospectus or any form of prospectus or in any amendment or
supplement thereto or in any preliminary prospectus, or arising out of or
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relating to any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein (in the case of any
prospectus or form of prospectus or amendment or supplement thereto, in light of
the circumstances under which they were made) not misleading, except solely to
the extent that (I) such untrue statements or omissions are based solely upon
information regarding such Holder furnished in writing to the Company by or on
behalf of such Holder expressly for use therein, which information was relied on
by the Company for use therein or (ii) such information relates to such Holder
or such Holder's proposed method of distribution of Registrable Securities and
was furnished in writing to the Company by or on behalf of such Holder expressly
for use therein. The Company shall notify the Holders promptly of the
institution, threat or assertion of any Proceeding of which the Company is aware
in connection with the transactions contemplated by this Agreement.
(b) Indemnification by Holders. In connection with each
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Registration Statement, each Selling Holder shall furnish to the Company in
writing such information as the Company reasonably requests for use in
connection with such Registration Statement or the related prospectus and
agrees, severally and not jointly, to indemnify and hold harmless the Company,
their directors, officers, agents and employees, each Person who controls the
Company (within the meaning of Section 15 of the Securities Act and Section 20
of the Exchange Act), and the directors, officers, agents or employees of such
controlling Persons, to the fullest extent permitted by applicable law, from and
against all Losses (as determined by a court of competent jurisdiction in a
final judgment not subject to appeal or review) arising solely out of or based
solely upon any untrue statement of a material fact contained in such
Registration Statement, such prospectus, or any form of prospectus, or arising
solely out of or based solely upon any omission of a material fact required to
be stated therein or necessary to make the statements therein not misleading
solely to the extent that (I) such untrue statement or omission is contained in
any information furnished in writing by such Holder to the Company specifically
for inclusion in such Registration Statement or such prospectus and such
information was relied upon by the Company for use in such Registration
Statement, such prospectus or such form of prospectus, or (ii) such information
relates to such Holder or such Holder's proposed method of distribution of
Registrable Securities and was furnished in writing by or on behalf of such
Holder to the Company specifically for inclusion in such Registration Statement
or such prospectus and such information was relied upon by the Company for use
in such Registration Statement, such prospectus or such form of prospectus;
provided, however, that anything contained herein to the contrary
-------- -------
notwithstanding, no Holder shall be liable for any claims hereunder in an amount
in excess of the net proceeds received by such Holder from the sale of its
Registrable Securities pursuant to a Registration Statement. In addition, the
foregoing shall not inure to the benefit of any Holder if a copy of such
prospectus (as then amended or supplemented) was furnished by the Company to
such Holder and was not sent or given by or on behalf of such Holder to such
Holder's purchaser of Registrable Securities if required by law to have been so
delivered.
(c) Conduct of Indemnification Proceedings. If any Proceeding is
---------------------------------------
brought or asserted against any Person entitled to indemnity hereunder (an
72
"Indemnified Party"), such Indemnified Party promptly shall notify the Person
--------------------
from whom indemnity is sought (the "Indemnifying Party") in writing, and the
------------------
Indemnifying Party shall assume the defense thereof, including the employment of
counsel reasonably satisfactory to the Indemnified Party and the payment of all
fees and expenses incurred in connection with defense thereof; provided that the
failure of any Indemnified Party to give such notice shall not relieve the
Indemnifying Party of its obligations or liabilities pursuant to this Agreement,
except (and only) to the extent that it is finally determined by a court of
competent jurisdiction (which determination is not subject to appeal or further
review) that such failure shall have proximately and materially adversely
prejudiced the Indemnifying Party.
An Indemnified Party shall have the right to employ separate counsel in any
such Proceeding and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such Indemnified Party or
Parties unless: (I) the Indemnifying Party has agreed to pay such fees and
expenses; or (ii) the Indemnifying Party shall have failed to assume promptly
the defense of such Proceeding and to employ counsel reasonably satisfactory to
such Indemnified Party in such Proceeding; or (iii) the named parties to any
such Proceeding (including any impleaded parties) include both such Indemnified
Party and the Indemnifying Party, and such Indemnified Party shall have been
advised by counsel that a conflict of interest is likely to exist if the same
counsel were to represent such Indemnified Party and the Indemnifying Party (in
which case, if such Indemnified Party notifies the Indemnifying Party in writing
that it elects to employ separate counsel at the expense of the Indemnifying
Party, the Indemnifying Party shall not have the right to assume the defense of
the claim against the Indemnified Party but shall retain the right to control
the overall Proceedings out of which the claim arose, and counsel employed by
the Indemnified Party shall be at the expense of the Indemnifying Party). The
Indemnifying Party shall not be liable for any settlement of any such Proceeding
effected without its written consent, which consent shall not be unreasonably
withheld. No Indemnifying Party shall, without the prior written consent of the
Indemnified Party, effect any settlement of any pending Proceeding in respect of
which any Indemnified Party is a party, unless such settlement includes an
unconditional release of such Indemnified Party from all liability on claims
that are the subject matter of such Proceeding.
All fees and expenses of the Indemnified Party to which the Indemnified
Party is entitled hereunder (including reasonable fees and expenses to the
extent incurred in connection with investigating or preparing to defend such
Proceeding in a manner not inconsistent with this Section) shall be paid to the
Indemnified Party, as incurred, within ten (10) Business Days after the
Indemnified Party gives written notice thereof to the Indemnifying Party.
(d) Contribution. If a claim for indemnification under Section
------------ -------
6(a) or 6(b) of this Agreement is unavailable to an Indemnified Party or is
---- ----
insufficient to hold such Indemnified Party harmless for any Losses in respect
of which this Section would apply by its terms (other than by reason of
exceptions provided in this Section), then each Indemnifying Party, in lieu of
-------
73
indemnifying such Indemnified Party, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such Losses, (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Indemnifying Party on the one hand and the Indemnified Party on the other from
the distribution of the Registrable Securities or (ii) if the allocation
provided by clause (i) above in this paragraph is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in such clause (i) but also the relative fault of the
Indemnifying Party and Indemnified Party in connection with the actions,
statements or omissions that resulted in such Losses as well as any other
relevant equitable considerations. The relative fault of such Indemnifying
Party and Indemnified Party shall be determined by reference to, among other
things, whether any action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission of a material fact,
has been taken or made by, or relates to information supplied by, such
Indemnifying Party or Indemnified Party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
action, statement or omission. The amount paid or payable by a party as a
result of any Losses shall be deemed to include, subject to the limitations set
forth in Section 6(c) hereof, any attorneys' or other fees or expenses incurred
------------
by such party in connection with any Proceeding to the extent such party would
have been indemnified for such fees or expenses if the indemnification provided
for in this Section was available to such party.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 6(d) were determined by pro rata
-------------
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 6(d), no Holder shall be required
-------------
to contribute, in the aggregate, any amount in excess of the amount by which the
proceeds actually received by such Holder from the sale of its Registrable
Securities subject to the Proceeding exceeds the amount of any damages that such
Holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation.
(e) The indemnity and contribution agreements contained in this
Section 6 and the representations and warranties of the Company set forth in
----------
this Agreement shall remain operative and in full force and effect, regardless
of any investigation made by or on behalf of any Holder or any Person
controlling Holder, the Company, its directors or officers or any Person
controlling the Company.
(f) No Indemnifying Party shall, without the prior written consent
of the Indemnified Party, effect any settlement of any pending or threatened
action, suit or proceeding in respect of which any Indemnified Party is or could
have been a party and indemnity could have been sought hereunder by such
Indemnified Party, unless such settlement includes an unconditional release of
such Indemnified Party from all liability on claims that are the subject matter
of such action, suit or proceeding.
74
(g) The indemnity and contribution agreements contained in this
Section are in addition to any liability that the Indemnifying Parties may have
to the Indemnified Parties.
7. Rule 144. The Company shall file the reports required to be filed
---------
by it under the Securities Act and the Exchange Act in a timely manner and, if
at any time the Company is not required to file such reports, it will, upon the
request of any Holder, make publicly available other information for as long as
necessary to permit sales of its securities pursuant to Rule 144. The Company
further covenants that it will take such further action as any Holder may
reasonably request, all to the extent required from time to time to enable such
Holder to sell Registrable Securities without registration under the Securities
Act within the limitation of the exemptions provided by Rule 144. Upon the
request of any Holder, the Company shall deliver to such Holder a written
certification of a duly authorized officer as to whether it has complied with
such requirements.
8. Rule 144A. The Company agrees that, upon the request of a Holder or
---------
any prospective purchaser of Registrable Securities designated by a Holder, the
Company shall promptly provide (but in any case within fifteen (15) days of a
request) to such Holder or potential purchaser, the following information:
(a) a brief statement of the nature of the business of the Company
and any subsidiaries and the products and services each of them offers;
(b) the most recent consolidated balance sheets and profit and
losses and retained earnings statements, and similar financial statements of the
Company for the two (2) most recent fiscal years (such financial information
shall be audited, to the extent reasonably available); and
(c) such other information about the Company, any subsidiaries,
and their business, financial condition and results of operations as such Holder
or purchaser of such Registrable Securities shall request in order to comply
with Rule 144A, as amended, and in connection therewith the anti-fraud
provisions of the federal and state securities laws.
The Company hereby represents and warrants to the Holders and any
prospective purchaser of Registrable Securities from a Holder that the
information provided by the Company pursuant to this Section 8 will, as of the
---------
dates of such information, not contain any untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements made,
in light of the circumstances under which they were made, not misleading.
9. Consent to be Bound; Assignability of Registration Rights. Each
-------------------------------------------------------------
subsequent holder of Registrable Securities must consent in writing to be bound
by the terms and conditions of this Agreement in order to acquire the rights
granted pursuant to this Agreement. Subject to the foregoing sentence, the
registration rights set forth in this Agreement are assignable to each assignee
75
of Registrable Securities conveyed in accordance herewith who agrees in writing
to be bound by the terms and conditions of this Agreement.
10. Miscellaneous.
-------------
(a) No amendment, modification, termination or cancellation of
this Agreement shall be effective unless made in a writing signed by the Company
and all of the Persons who are then Holders of Registrable Securities;
(b) The Company and the Holders agree that the rights created by
this Agreement are unique, and that the loss of any such right is not
susceptible to monetary quantification. Consequently, the parties agree that an
action for specific performance (including for temporary and/or permanent
injunctive relief) of the obligations created by this Agreement is a proper
remedy for the breach of the provisions of this Agreement, without the necessity
of proving actual damages. If the parties hereto are forced to institute legal
proceedings to enforce their rights in accordance with the provisions of this
Agreement, the prevailing party shall be entitled to recover its reasonable
expenses, including attorneys' fees, in connection with any such action;
(c) Except as otherwise specifically provided herein, all notices,
requests, demands and other communications provided for hereunder shall be in
writing and shall be deemed duly given to the Person for whom intended (i) upon
receipt when personally delivered, (ii) one (1) day after being sent by a
nationally recognized overnight courier for next day delivery or telecopy
providing confirmation or receipt of delivery, or (iii) three (3) days after
being sent by certified or registered mail, postage and certified or registered
mail fees prepaid, return receipt requested, if sent to such Person at the
address for such Person indicated below or to such other address as may be
designated by such Person in writing sent by such Person in the manner required
by this Section:
If to the Company: Heritage Worldwide, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇ ▇▇▇▇▇-▇▇▇ Mer, France
Attn: ▇▇▇▇ ▇▇▇▇▇▇ Mas, President and CEO
Tel: (▇▇) ▇▇▇-▇▇▇▇▇▇
Fax: (▇▇) ▇▇▇-▇▇▇▇▇▇
With copies to: Gottbetter & Partners, LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Holders: To the address of each such Holder as it
appears in the stock transfer records of the
Company
76
With copies to: Gottbetter & Partners, LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(d) This Agreement may be executed in any number of counterparts,
each of which when so executed shall be deemed to be an original and, all of
which taken together shall constitute one and the same Agreement. In the event
that any signature is delivered by facsimile transmission, such signature shall
create a valid and binding obligation of the party executing (or on whose behalf
such signature is executed) the same with the same force and effect as if such
facsimile signature were the original thereof;
(e) This Agreement shall be governed by and construed in
accordance with the laws of the state of New York without regard to principles
thereof relating to the conflict of laws. Each of the Company and each Holder
hereby irrevocably submits to the jurisdiction of any New York state court or
any federal court sitting in the city and county of New York (collectively, the
"New York Courts") in respect of any Proceeding arising out of or relating to
this Agreement and irrevocably accepts for itself and in respect of its
property, generally and unconditionally, jurisdiction of the New York Courts.
Each of the Company and each Holder irrevocably waives, to the fullest extent it
may effectively do so under applicable law, any objection that it may now or
hereafter have to the laying of the venue of any such Proceeding brought in any
New York Court and any claim that any such Proceeding brought in any New York
Court has been brought in an inconvenient forum;
(f) The remedies provided herein are cumulative and not exclusive
of one another or of any remedies provided by law;
(g) If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated, and the parties hereto shall use
their reasonable efforts to find and employ an alternative means to achieve the
same or substantially the same result as that contemplated by such term,
provision, covenant or restriction. It is hereby stipulated and declared to be
the intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.
(h) The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
[Signatures on following page]
77
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
Company:
HERITAGE WORLDWIDE, INC.
By:
-----------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇ Mas
Title: President and CEO
Holder:
ARMADILLO INVESTMENTS, PLC.
By:
-----------------------------
Name:
Title: Director
78